23 February 2018

Ethiopia: Tapping Agoa to Boost Earning


African Growth and Opportunity Act (AGOA) has provided a powerful incentive to African countries by increasing trade and investment and spurring inclusive economic growth. Ethiopia is among these African countries that cease this opportunity to use the AGOA.

The aim of AGOA is to offer duty-free access to the US market to qualified and eligible African countries.

Lately, a telephonic Press briefing was held with US Acting Director for Economic and Regional Affairs, Harry Shullivan, on matters relating to AGOA. The telephonic briefing was held among various African journalists. The Acting Director said that Ethiopia got off to a later start than some of the other AGOA-eligible countries, but one of the things that is very encouraging over the last years is a tremendous amount of growth that has come from Ethiopia, and certainly the country's diversified market, which means it has more potential for exporting in the United States. According to him, Ethiopia exports under AGOA hit 35 percent or 92 billion USD.

"As a consumer of some African products here in the United States, for instance, we have a large diaspora in the United States, I can tell you that we can buy Tej here, we can get Injera... there are [also] those agricultural products that are making headway, as well as textiles, and we think that Ethiopia has great potential."

Concerning to other African countries, he said increased oil exports did account for a large share of this increase, but some encouraging signs of diversification had also been witnessed. African exports of agricultural products to the United States rose 10 percent or to 2.7 billion in 2017. "We also saw another encouraging trend; more countries are getting more advantage from AGOA, and so between 2016 and 2017, Ghana saw its exports to the United States more than double, with exports under AGOA quadrupling to more than 300 million USD. Madagascar also registered strong growth in garment exports under AGOA by more than 57 percent to 152 billion USD. Countries like Senegal, Rwanda, Namibia, and Uganda have also succeeded in boosting overall exports to the United States and exports under AGOA.

"There is a huge potential for African businesses in the United States. It's not easy, but I think businesses that have been able to take advantage successfully of the American market have benefited significantly and I would encourage you all to promote AGOA among the private sector in Africa, and work with our trade hubs in order to make concrete opportunities happen."

African non-oil exports to the U.S. under AGOA have grown from 1.3 billion USD in 2001, the year that the legislation was passed, to 4.2 billion USD in 2016, and it has been even better since then. "Our government recently compiled statistics for U.S.-Africa trade through 2017, and I'm happy to report that the trend continues to be positive. Total U.S. trade with sub-Saharan Africa rose 16.8 percent, 33 billion USD in 2016, to 38.5 billion USD in 2017, last year. U.S. exports to Africa increased four percent to 13.1 billion USD, while African exports to the United States rose by more than 24 percent to more than 24 billion USD.

According to the Director, Africa has lagged behind the rest of the world in terms of levels of intra-regional trade. According to the World Economic Forum, roughly 12 percent of total African exports are to regional neighbors, compared with 25 percent in ASEAN and over 60 percent in the European Union.

"So we're working with African countries to try to improve that number. We're also supporting regional integration, which will not only bring direct benefits to countries that can supply regional markets, but it will also help African economies to compete for investment and develop additional value chains that can supply global markets."

In this writer's opinion, the initiative paves the way for boosting investment. Though development is dominantly self-driven, it pushes for more development from outside. Still, African countries have to work hard to benefit the best out of it. And the US has to strive more to set the way for Africa and Africans' benefits.


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